COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 02-12-00196-CV

New Hampshire Insurance Company

v.

Magellan Reinsurance Company, 

Ltd.

§

§

§

§

From the 236th District Court

of Tarrant County (236-213761-05)

February 14, 2013

Opinion by Justice Meier

JUDGMENT

This court has considered the record on appeal in this case and holds that 

there was no error in the trial court’s order. It is ordered that the order of the trial 

court is affirmed.

It is further ordered that Appellant New Hampshire Insurance Company 

shall pay all costs of this appeal, for which let execution issue.

SECOND DISTRICT COURT OF APPEALS 

By_________________________________

 Justice Bill Meier
COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 02-12-00196-CV

NEW HAMPSHIRE INSURANCE 

COMPANY

APPELLANT

V.

MAGELLAN REINSURANCE

COMPANY, LTD.

APPELLEES

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FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

----------

MEMORANDUM OPINION1

----------

I. INTRODUCTION

The litigation between Appellant New Hampshire Insurance Company and 

Appellee Magellan Reinsurance Company, Ltd. has been lengthy, vigorously

contested, and well traveled. It began in 2004 in the Turks and Caicos Islands 

 

1See Tex. R. App. P. 47.4.
2

(TCI), included brief proceedings in New York, and is now—eight years later, yet 

still in its infancy—ongoing in Texas. While the essence of the underlying

dispute between New Hampshire and Magellan has remained unchanged since 

the inception of the litigation, New Hampshire’s opinion about the arbitrability of 

the disputed matters has not. Because we hold that New Hampshire is judicially 

estopped from compelling arbitration, we will affirm the trial court’s order denying 

New Hampshire’s motion to compel arbitration.

II. FACTUAL AND PROCEDURAL BACKGROUND

New Hampshire is a Pennsylvania corporation that is authorized to 

conduct business in Texas. Magellan is a corporation chartered in the TCI. Its 

primary place of business is Tarrant County, Texas.

In 1997, New Hampshire and Magellan entered into a “Contractual 

Reimbursement Insurance Reinsurance Agreement,” whereby Magellan agreed 

to accept 100% of New Hampshire’s obligations and liabilities under a number of 

automobile dealer insurance policies issued by New Hampshire in exchange for

100% of the gross written premiums paid under the policies, less a provisional 

ceding commission to New Hampshire. The Reinsurance Agreement required 

Magellan to establish a trust account, from which New Hampshire was 

authorized to withdraw funds to secure payments under the Reinsurance 

Agreement. The Reinsurance Agreement also contains an arbitration provision, 

which provides in relevant part that “[a]ll disputes or differences arising out of the 
3

interpretation of this Agreement shall be submitted” to arbitration in New York. 

[Emphasis added.]

In April 2002, New Hampshire made “a series of withdrawals” from the 

trust account—over $2 million according to Magellan—“effectively emptying” it.

New Hampshire subsequently informed Magellan that the trust fund required a 

deposit of approximately $1.2 million. Magellan identified several discrepancies 

in New Hampshire’s claims handling and accounting, disagreed that the deposit 

was necessary, and requested a refund from New Hampshire in the amount of 

approximately $995,000. New Hampshire and Magellan continued to exchange 

correspondence over the next few years—New Hampshire defended its claims 

handling and accounting and demanded that Magellan deposit approximately

$1.4 million into the trust account, and Magellan challenged New Hampshire’s 

claims amounts, demanded to inspect New Hampshire’s books and records, and 

refused to deposit the $1.4 million into the trust account.

Relying upon the demanded but unpaid $1.4 million and a TCI ordinance 

related to a company’s inability to pay a “debt,” New Hampshire filed a petition in 

August 2004 in a TCI court to “wind up” Magellan’s business. Magellan

responded by moving to stay the proceedings and to compel arbitration. New 

Hampshire argued against arbitration, contending that the dispute did not involve 

the interpretation of the Reinsurance Agreement but only whether Magellan was 

insolvent. The TCI lower court agreed with New Hampshire, declined to compel 
4

arbitration, and ordered Magellan to be wound up. An appeal reversing the lower 

court, a remand, and additional litigation in the TCI courts ensued.

Meanwhile, at some point before the TCI lower court issued its final ruling, 

Magellan initiated a proceeding in a New York state court to enjoin the TCI 

litigation and to compel New Hampshire to arbitration in New York. New 

Hampshire contested the action, arguing that Magellan’s “statutory insolvency”

under TCI law was not a dispute that involved the interpretation of the 

Reinsurance Agreement. After the TCI lower court had ruled, the New York court 

denied Magellan’s requested relief, concluding—just like the TCI lower court

had—that “[t]he question of whether [Magellan] owes money is not an 

interpretation of the reinsurance contract; rather, it is a factual controversy 

concerning respondent’s calculation of the amount in dispute . . . .”

In September 2005, while the TCI litigation was still pending, Magellan 

sued New Hampshire in Texas and asked the trial court to make nine 

declarations regarding the parties’ rights “under the Reinsurance Agreement.” 

Magellan amended its original petition later in September 2005, and with the 

exception of two declarations, Magellan asked the trial court to make all of the 

same declarations as those pleaded in the original petition.

In December 2005, New Hampshire filed a motion to dismiss or abate 

Magellan’s Texas action. New Hampshire argued that the relief was necessary 

because “[t]he issues Magellan now asks this Court to decide mirror those 
5

raised, litigated[,] and currently pending in the TCI . . . Action.” The trial court

abated the Texas action in February 2006 pending resolution of the TCI litigation.

The TCI litigation came to a conclusion in July 2009 when the Lords of the 

Judicial Committee of the Privy Council held that New Hampshire was not a 

“creditor” of Magellan and, therefore, could not “wind up” Magellan’s business.

Two years later, in June 2011, the Texas trial court purported to vacate the order 

abating the case.

In November 2011, New Hampshire, for the first time, moved to compel 

arbitration of Magellan’s then-pleaded declaratory judgment claims. New 

Hampshire argued that arbitration was necessary because Magellan had

repeatedly admitted as much in earlier proceedings. Detailing New Hampshire’s 

history of contesting arbitration, Magellan responded that judicial estoppel, 

judicial admission, collateral estoppel, and waiver barred New Hampshire from

compelling arbitration of Magellan’s claims. In December 2011, before the 

hearing on New Hampshire’s motion, Magellan filed its second amended petition, 

removing its nine requests for declaratory relief and substituting claims against 

New Hampshire for breach of contract, fraud, breach of fiduciary duty, 

conversion, accounting, and theft under the Texas Theft Liability Act. The trial 

court ultimately denied New Hampshire’s motion to compel arbitration. This 

interlocutory appeal followed.

III. PRIOR DISMISSAL FOR WANT OF PROSECUTION
6

Neither party raises any jurisdictional arguments, but we feel compelled to

first address a procedural matter that was partly the subject of a recent original 

proceeding in this court. On December 30, 2009, the Texas trial court dismissed

for want of prosecution Magellan’s lawsuit against New Hampshire. Almost

fifteen months later, on March 17, 2011, the trial court vacated its December 30, 

2009 dismissal order and reinstated the cause. New Hampshire later filed a 

petition for writ of mandamus, arguing that the trial court lacked plenary power to 

reinstate the cause. See In re New Hampshire Ins. Co., No. 02-12-00281-CV, 

2012 WL 3264392, at *1 (Tex. App.—Fort Worth Aug. 13, 2012, orig. proceeding)

(mem. op.). This court agreed with New Hampshire (notwithstanding that the 

cause had been abated when the trial court dismissed it) and conditionally 

granted the petition. Id. at *1–2. Although our holding meant that the cause was 

not reinstated in March 2011, Magellan later invoked the Texas trial court’s 

subject-matter jurisdiction by filing the second amended petition in December 

2011. See Leach v. Brown, 156 Tex. 66, 68–69, 292 S.W.2d 329, 330–31 (1956) 

(holding that the filing of an amended petition in the same cause in which a final 

judgment had already been entered was, like an original petition, sufficient to 

invoke the trial court’s jurisdiction). We therefore observe no jurisdictional 

impediment to our consideration of this interlocutory appeal.2

 

2

This court has also previously issued a memorandum opinion addressing 

New Hampshire’s arguments that Magellan failed to comply with the 

requirements for recognition of foreign country judgments under the Uniform 

Foreign Country Money-Judgment Recognition Act. See New Hampshire Ins. 
7

IV. ARBITRABILITY OF MAGELLAN’S CLAIMS

In what we construe as a single issue, New Hampshire argues that the trial 

court erred by refusing to compel arbitration of the claims pleaded by Magellan in 

its second amended petition. Specifically, New Hampshire contends that the 

claims involve the interpretation of the Reinsurance Agreement, that it did not 

waive the right to arbitrate any of the claims, and that none of the other equitable 

principles cited by Magellan prevent enforcement of the arbitration provision 

because the pending claims are separate and distinct from the matters involved 

in the TCI and New York litigation.

Magellan responds that its fraud, breach of fiduciary duty, conversion, 

theft, and accounting claims are outside the scope of the arbitration clause

because, on their face, they do not involve the interpretation of the Reinsurance 

Agreement. Further, although Magellan does not dispute that its breach of 

contract claim is within the scope of the arbitration agreement, it argues that its 

former requests for declaratory relief “essentially morphed” into the breach of 

contract claim and that New Hampshire’s request to compel arbitration of the 

breach of contract claim is barred by judicial estoppel, judicial admission, 

collateral estoppel, and waiver because of New Hampshire’s prior conduct

contesting arbitration in the TCI litigation, the New York proceeding, and the pre-

 

Co. v. Magellan Reinsurance Co., No. 02-11-00334-CV, 2013 WL 105654, at *1 

(Tex. App.—Fort Worth Jan. 10, 2013, no pet.) (mem. op.). Nothing in that 

opinion conflicts with our holding in this memorandum opinion.
8

second amended petition Texas litigation. To the extent that the non-breach of 

contract claims are covered by the arbitration agreement, Magellan argues that 

they too are barred on the same grounds.

New Hampshire replies that its past arguments contesting arbitration are 

irrelevant and cannot preclude it from compelling arbitration at this point because

the second amended petition alleges entirely new causes of action, the 

arbitrability of which New Hampshire has never argued against.

A. Standard of Review

We review the trial court’s denial of a motion to compel arbitration for an 

abuse of discretion. See In re Labatt Food Svc., L.P., 279 S.W.3d 640, 643 (Tex. 

2009) (orig. proceeding); Cleveland Constr., Inc. v. Levco Constr., Inc., 359 

S.W.3d 843, 851–52 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d) 

(explaining standards of review for arbitration appeals). Under this standard, we 

defer to the trial court’s factual determinations that are supported by the record 

and review legal questions de novo. Cleveland Constr., Inc., 359 S.W.3d at 851–

52.

B. Choice of Law

The Reinsurance Agreement states that it “shall be governed by and 

construed in accordance with the laws of the State of New York.” Although New 

Hampshire observes that the Reinsurance Agreement is governed by New York 

law and cites a number of New York cases in its briefing, it predominantly relies 

on Texas caselaw and has confirmed on several occasions that there is no 
9

relevant distinction between Texas and New York law. “As there appears to be 

no conflict of laws, ‘there can be no harm in applying Texas law.’” In re 

AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005) (orig. proceeding) 

(quoting Compaq Computer Corp. v. Lapray, 135 S.W.3d 657, 672 (Tex. 2004)); 

Aldridge v. Thrift Fin. Mktg., LLC, 376 S.W.3d 877, 882 (Tex. App.—Fort Worth 

2012, no pet.) (reasoning similarly). We therefore apply Texas law.

C. Magellan’s Non-Breach of Contract Claims

A party attempting to compel arbitration must establish a valid arbitration 

agreement whose scope includes the claims asserted.3 In re Dillard Dep’t 

Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding). In determining 

whether a claim falls within the scope of an arbitration agreement, we focus on 

the factual allegations of the complaint, rather than the legal causes of action 

asserted. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 271 (Tex. 1992). 

Any doubts about whether Magellan’s non-breach of contract claims fall within 

the scope of the arbitration agreement must be resolved in favor of arbitration. 

Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995). The policy in 

favor of enforcing arbitration agreements is so compelling that a court should not 

deny arbitration unless it can be said with positive assurance that an arbitration 

clause is not susceptible of an interpretation that would cover the dispute at 

issue. Id. If a party establishes a valid arbitration agreement whose scope 

 

3Whether the Federal Arbitration Act (FAA), Texas Arbitration Act, or both 

apply is not at issue in this appeal, nor does it affect our analysis or jurisdiction.
10

includes the claims asserted, the burden shifts to the party opposing arbitration to 

prove its defenses to arbitration. AdvancePCS Health, L.P., 172 S.W.3d at 607.

Here, there is no dispute that a valid arbitration agreement exists. As for 

whether Magellan’s non-breach of contract claims are subject to arbitration, the

fraud claim complains of “words, acts, [and] conducts [by New Hampshire] . . . 

which were false.” The breach of fiduciary duty claim alleges that New 

Hampshire “acted in its own best interest and contrary to the interest of 

Magellan.” The conversion claim alleges that in withdrawing trust funds, New 

Hampshire “converted property which belonged to Magellan.” The theft claim 

alleges that New Hampshire “unlawfully appropriated or stole the funds contained 

in the trust account.” And the accounting claim alleges that New Hampshire 

“should be required to render a full and complete detailed accounting of all claims 

and monies paid.” Thus, to some extent, each of Magellan’s claims implicates 

New Hampshire’s duties and responsibilities under the Reinsurance Agreement. 

We therefore cannot conclude with positive assurance that Magellan’s nonbreach of contract claims do not require—or at a minimum, touch upon in some 

way—the interpretation of the Reinsurance Agreement. See, e.g., In re FirstMerit 

Bank, N.A., 52 S.W.3d 749, 754–56 (Tex. 2001) (compelling arbitration of tort 

claims related to financing contract); Jack B. Anglin Co., 842 S.W.2d at 271 

(“Although the City’s misrepresentation claims are grounded in legal theory 

distinct from its contract claim, they are factually intertwined, and thus are subject 

to the arbitration provision of the contract.”); Hou-Scape, Inc. v. Lloyd, 945 
11

S.W.2d 202, 205–06 (Tex. App.—Houston [1st Dist.] 1997, orig. proceeding) 

(holding that tort claims were arbitrable because they arose out of and were

related to contract). We hold that Magellan’s fraud, breach of fiduciary duty, 

conversion, theft, and accounting claims are within the scope of the arbitration 

agreement.

D. Magellan’s Defense to Arbitration: Judicial Estoppel

Magellan argues that even if all of its claims are subject to arbitration, New 

Hampshire is judicially estopped from compelling arbitration of those claims. We 

agree.

The doctrine of judicial estoppel precludes a party who successfully 

maintains a position in one proceeding from afterwards adopting a clearly 

inconsistent position in another proceeding to obtain an unfair advantage. 

Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 643 (Tex. 2009); 

Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008), cert. 

denied, 555 U.S. 1137 (2009). It is not intended to punish inadvertent omissions 

or inconsistencies but rather to prevent parties from playing fast and loose with 

the judicial system for their own benefit. Ferguson, 295 S.W.3d at 643. As one 

court has observed, the doctrine’s purpose is “to prohibit the deliberate shifting of 

position to suit exigencies of each particular case that may arise concerning the 

subject matter in controversy.” Moore v. Neff, 629 S.W.2d 827, 829 (Tex. App.—

Houston [14th Dist.] 1982, writ ref’d n.r.e.).
12

The record demonstrates that Magellan first raised the issue of arbitration 

at the outset of the TCI litigation, when it sought to stay those proceedings. New 

Hampshire argued against arbitration and described the dispute as regarding the 

“calculation of sums owing,” which according to New Hampshire, did not involve

the interpretation of the Reinsurance Agreement. The TCI lower court agreed 

with New Hampshire and denied Magellan’s request to stay the proceedings for

arbitration. Thus, in successfully defending against arbitration in the TCI 

litigation, New Hampshire convinced the TCI lower court that the scope of the 

proceedings there did not involve any interpretation of the Reinsurance 

Agreement.

Magellan raised the issue of arbitration again in the New York proceeding 

when it sought to enjoin the TCI proceedings. As in the TCI litigation, New 

Hampshire argued against arbitration, describing its petition in the TCI action as

one that was “not based upon a dispute regarding the interpretation of the 

Reinsurance Agreement” and explaining that “Magellan’s statutory insolvency 

under” TCI law did not involve the interpretation of the Reinsurance Agreement.

The New York court declined to stray from the reasoning of the TCI lower court’s 

order denying arbitration and, like the TCI lower court, adopted New Hampshire’s 

narrow interpretation of the proceedings, concluding that “[t]he question of 

whether petitioner owes money is not an interpretation of the” Reinsurance 

Agreement.
13

In September 2005, as the TCI litigation progressed, Magellan initiated the 

Texas action and sought nine declarations regarding the parties’ rights “under the 

Reinsurance Agreement.” Notwithstanding Magellan’s unambiguous reference 

explaining its intent in seeking the declarations (to determine rights “under the 

Reinsurance Agreement”), even the most cursory review of the nine declarations 

reveals that each indisputably required an interpretation of the Reinsurance 

Agreement; they stated,

a. Whether [New Hampshire] validly withdrew funds from the 

trust and whether [New Hampshire] is obligated to refund 

amounts previously withdrawn in error from the trust and the 

amount of such refund, including interest;

b. Whether the Reinsurance Agreement allows a deduction for 

“timing differences”;

c. Whether [New Hampshire] can withdraw amounts from the 

Trust without providing supporting detailed claims 

documentation that supports the amounts withdrawn;

d. Whether [New Hampshire] has sole discretion to summarily 

determine the amount of unearned premium reserves 

pursuant to Article IV of the Reinsurance Agreement;

e. the detail required in the cession statements under Article VII 

of the Reinsurance Agreement;

f. Magellan’s right to audit [New Hampshire’s] books and 

records under Article XI of the Reinsurance Agreement; and 

whether, under Article XI of the Reinsurance Agreement, 

Magellan sufficiently disputed the amount [New Hampshire] 

claims is owing to the Trust;

g. the identity of dealers and/or contracts covered by the 

Reinsurance Agreement;
14

h. whether, under Article XI of the Reinsurance Agreement, 

Magellan’s request to audit [New Hampshire’s] books and 

records can be conditioned on Magellan depositing the 

amount requested by [New Hampshire] into the Trust, and 

vice versa; and

i. the correct and valid amount of the reinsurance claims, if any, 

by [New Hampshire] against Magellan.

Although New Hampshire had successfully argued against arbitration by narrowly 

defining both the purpose and scope of the proceedings as involving only a 

determination of the amount of money owed by Magellan to New Hampshire,

when it sought to dismiss or abate Magellan’s Texas lawsuit, it argued that “[t]he 

issues Magellan now asks this Court to decide [which obviously involved an 

interpretation of the Reinsurance Agreement] mirror those raised, litigated[,] and 

currently pending in the TCI . . . Action.” [Emphasis added.] Indeed, New 

Hampshire successfully argued,

The central issue in the TCI lawsuit is whether Magellan should be 

wound up for its failure to adequately fund a trust account pursuant 

to the terms of a reinsurance agreement between the parties. 

Though that precise issue is not presented to this Court in 

Magellan’s request for declaratory judgment, all issues presented 

are part and parcel of that determination and all concern the amount 

of Magellan’s debt to [New Hampshire], an issue that will be 

addressed by the liquidator appointed in the TCI Action. Because all 

issues in this subsequently-filed action may be, or currently are, in 

litigation in the TCI lawsuit, this Court should dismiss Magellan’s 

request for declaratory judgment. [Emphasis added.]

Thus, in seeking to dismiss or abate the Texas action, New Hampshire’s 

interpretation of the scope of the TCI litigation shifted from its earlier narrow 

description of the proceedings as merely involving a determination of the amount 
15

of money owed by Magellan to broadly construing the proceedings to include all 

of Magellan’s declarations seeking to interpret multiple parts of the Reinsurance 

Agreement. Notwithstanding this, and perhaps intending to quash any further 

attempts by Magellan to compel arbitration in light of New Hampshire’s amended 

perception of the scope of the proceedings there, New Hampshire stated in a 

footnote in its motion to dismiss or abate that it “denies that there is a dispute 

‘arising out of interpretation of the Reinsurance Agreement,’” a statement that 

irreconcilably conflicted with its arguments broadly construing the scope of the 

TCI litigation. New Hampshire subsequently prevailed, just as it had in the TCI 

lower court and the New York litigation.

Several years later, after the TCI litigation had concluded, New Hampshire 

moved to compel arbitration of Magellan’s claims, which at the time were those 

included in Magellan’s first amended petition—the nine declarations. According 

to New Hampshire, “a valid arbitration agreement exists that is in writing, 

encompasses the subject matter of the dispute, involves transactions in interstate 

commerce, and therefore requires arbitration under the FAA.” Although Magellan 

quickly filed its second amended petition, removing the declaration requests and 

substituting them with its current claims, New Hampshire’s intent was clear: it

now wanted to arbitrate Magellan’s claims.

The foregoing portions of the record thus show that, regarding the scope of 

the TCI and New York litigation as it pertained to the propriety of compelling 

arbitration, New Hampshire, to its benefit, maintained a position in the TCI lower 
16

court and the New York proceeding that was inconsistent with its position in the 

Texas action. Now, a number of years later, New Hampshire is attempting to 

accomplish a similar feat; it successfully argued against arbitration of Magellan’s 

claims in the TCI litigation and the New York proceeding but now wants to

compel arbitration. The unfair advantage that New Hampshire stands to gain 

simply consists of the fruits of shifting position to suit the exigencies of each 

particular cause. See Ferguson, 295 S.W.3d at 643; Moore, 629 S.W.2d at 829. 

This is the precise conduct that judicial estoppel is meant to prohibit.

New Hampshire argues that its prior conduct contesting arbitration is 

irrelevant because it has never argued that the claims alleged by Magellan in its 

second amended petition are not arbitrable. According to New Hampshire, 

“Magellan identifies no case law or other authority . . . holding that an alleged 

waiver or estoppel of a party’s right to arbitration applies to a later-amended 

complaint alleging entirely new causes of action.” This is a compelling argument, 

but it is ultimately unpersuasive because it relies upon a hypertechnical 

perspective of the proceedings that is inconsistent with the reality of what this 

dispute has always been, and continues to be, about—both parties’ rights and 

duties and compliance or noncompliance with one or more terms of the 

Reinsurance Agreement.

When Magellan filed its original petition in the Texas action, it attached 

correspondence between it and New Hampshire dating as far back as 2002. 

Even at this early stage of the dispute, it was apparent that the disagreements 
17

between the parties involved their respective rights and duties under the 

Reinsurance Agreement—New Hampshire defended its claims handling and 

accounting and demanded that Magellan deposit funds into the trust account, 

and Magellan challenged New Hampshire’s claims amounts, demanded to 

inspect New Hampshire’s books and records, and refused to deposit additional 

funds into the trust account. The correspondence abounds with references to the 

Reinsurance Agreement.

In the TCI litigation, New Hampshire convinced the TCI lower court that 

arbitration was unnecessary because the dispute involved only the calculation of 

money owed by Magellan, an exclusively non-interpretive, factual matter. But the

record belies this overly narrow characterization; the dispute involved much more 

than a simple debt, and Magellan tried to explain this in the TCI litigation. Philip 

Apgar’s affidavit, which Magellan appears to have filed as part of its first appeal 

of the lower court’s order requiring Magellan’s business to be wound up, 

illuminated the extent of the dispute between the parties, stating,

It is apparent that there are significant differences between the 

parties. They are in effect of at least two types.

(1) First there are issues regarding the principles on which [New 

Hampshire] has produced its Cession Statements and the 

appropriate sums that ought to be included within them. 

These include questions regarding the extent of [New 

Hampshire’s] discretion to charge its costs against premiums 

and to determine the level of unearned premium reserve.

(2) Secondly, there is the question of whether under the 

Reinsurance Agreement the parties intended that Magellan, 

when faced with a payment demand which could only be 
18

validated by an audit of the Petitioner’s records under Art XI, 

would in effect be barred from challenging that demand unless 

it had exercised its audit right within two calendar quarters of 

service of the demand by the Petitioner.

. . . .

I am advised that [the] winding up procedure ought not to be 

used for claims other than genuinely undisputed debts and claims 

where, though there is a dispute, the dispute can be shown easily 

and quickly to be not genuine in the sense of being groundless. I 

would submit that it is apparent from what I say above that here 

there is a real dispute which is still unresolved after months of 

detailed argument by myself and, on [New Hampshire’s] behalf, Ms. 

Cheshire.

It is moreover a dispute of a type which the parties have 

agreed should be dealt with by arbitration and which is particularly 

suitable for arbitration.

And particularly telling is the judgment of the Lords of the Judicial Committee of 

the Privy Council. Even though the limited issue before the high court concerned 

New Hampshire’s status as a “creditor,” the judgment includes approximately five

single-spaced pages of excerpts from the Reinsurance Agreement. Given that 

New Hampshire’s and Magellan’s relationship is governed by the Reinsurance 

Agreement, it is no surprise that the high court chose to begin its analysis by 

extensively referencing the Reinsurance Agreement’s terms.

In the New York proceeding, New Hampshire persisted in its 

characterization of the dispute as one not involving the interpretation of the 

Reinsurance Agreement, but in doing so, it simultaneously observed that the 

dispute involved Magellan’s failure to deposit funds into a trust account “as 

required by the Reinsurance Agreement.” [Emphasis added.] Thus, even when
19

narrowly characterizing the scope of the dispute before the New York court, New 

Hampshire could not escape the significance of the Reinsurance Agreement as it 

pertained to New Hampshire’s relationship and dispute with Magellan.

And finally, although Magellan has amended its petition several times, its 

claims in the Texas litigation—whatever label they have been given—have 

consistently implicated an interpretation of the terms of the Reinsurance 

Agreement. Cf. Jack B. Anglin Co., 842 S.W.2d at 271 (reasoning that we focus 

on the factual allegations of the complaint, rather than the legal causes of action 

asserted, when determining whether claim falls within the scope of an arbitration 

agreement).

A thorough review of the record thus reveals this: Neither New 

Hampshire’s varying characterizations of the proceedings nor the labels attached 

to the claims alleged by Magellan in its petitions define the essence of the

dispute between New Hampshire and Magellan. The dispute has always 

centered around, and continues to entail, each party’s rights and duties and 

compliance or noncompliance under the Reinsurance Agreement. On more than 

one occasion, in one form or another, New Hampshire has argued against the 

arbitrability of this dispute. Its conduct has been overwhelmingly inconsistent 

with its present attempt to compel arbitration. Accordingly, in light of all the 

foregoing, we cannot agree with New Hampshire’s overriding argument that it 

has never challenged the arbitrability of the claims alleged by Magellan in its

second amended petition.
20

We hold that New Hampshire is judicially estopped from compelling 

arbitration and, therefore, that the trial court did not abuse its discretion by 

denying New Hampshire’s motion to compel arbitration. We overrule New 

Hampshire’s sole issue.

V. CONCLUSION

Having overruled New Hampshire’s only issue, we affirm the trial court’s 

order denying New Hampshire’s motion to compel arbitration.

BILL MEIER

JUSTICE

PANEL: GARDNER, MCCOY, and MEIER, JJ.

DELIVERED: February 14, 2013